SUPPLY-CHAIN MANAGEMENT SUPPLEMENT: Advancing along the Supply Chain

Real-time technology gets ready for prime time as biopharm growth and counterfeiting raise supply-chain stakes.


The “magic refrigerator” doesn’t levitate or transform an opened bottle of Welch’s grape juice into Château Mouton Rothschild cabernet sauvignon. If you’re a hospital administrator, however, it does something much, much better, according to John Beans of Blue Vector Systems. It keeps patients safe and makes your job in the pharmaceutical and medical supply chain easier and, ultimately, more cost-effective.

Blue Vector Systems (Palo Alto, CA) is on the growing list of suppliers selling solutions designed to ensure that drugs and medical devices journey through distribution to a patient’s bedside and hospital OR intact and on time. Since the beginning of 2008, companies such as Blue Vector, AeroScout, Axway, Sensitech, and Lockheed Martin’s Savi have all announced new supply-chain products, services, or alliances.

Placed in hospital pharmacies and other customer locations, the refrigerator in question is provided by a major healthcare distributor, says Beans, Blue Vector’s vice president of marketing. The magic comes from embedded Blue Vector software running in each refrigerator that notifies the distributor when it’s time to replenish the stock of, say, blood-clotting agents and other drugs that can cost thousands of dollars for a single dose. After all, hospital administrators “are caregivers, not inventory managers,” says Beans.

Beans uses the scenario of a major traffic accident to describe how the system works. The catastrophe causes a “run” on a drug, which the distributor notices in real time, he says. Detecting when hospital personnel have removed a larger-than-expected quantity of drugs from the refrigerator, the Blue Vector system immediately notifies the drug distributor that those doses are gone.

“After a configurable length of time we’ll call that drug ‘taken,’ ” Beans says. And at “certain set points” the information goes out to the redistribution center to replace the items as soon as possible. As he puts it, “At the point of care you do not want to run out of a lifesaving drug.”

Several suppliers point to growing sales of RFID, 2-D codes, GPS, and other technological tools to prevent counterfeiting, diversion, and inefficiency in the global multi-billion-dollar drug and device industries. Wavetrend (Richmond, Surrey, UK) reports that sales of active RFID systems alone are projected to grow from $74 million in 2007 to more than $7 billion by 2017. The key driver is the need for real-time location systems, according to the supplier, which markets the Wi-Fi–based technology.

“There is a need to pinpoint products,” suggests Jim Sabogal, vice president and head of the life sciences business unit for SAP (Newtown Square, PA), which specializes in serialization and authentication solutions using RFID and 2-D bar codes. Based on 2006 estimates by the World Health Organization, the Center for Medicine in the Public Interest projects drug counterfeiting to grow 6–8% annually at a cost to U.S. drug manufacturers alone of approximately $30 billion per year, according to SAP.

To combat the problem, SAP’s Auto-ID Infrastructure offers a solution for managing “serialized” objects that links data to specific business processes, Sabogal says. The SAP object event repository is the centralized system of record that supports an Auto-ID instance across the enterprise. “All the events that occur to each and every serialized object in the supply chain will be recorded in this central repository,” he says. The database has a “drill-down and drill-back capability, so if you have a recall or some anomalies, you can go to one source in your enterprise.”

Sabogal says “it makes sense” that medical device and drug packagers track and authenticate products, particularly as they leave the supply chain and enter the sterile operating room, for instance. Artificial limbs are a good example. “They don’t just send out one hip assembly; they send out multiple assemblies,” he notes. The components that haven’t been used are returned to the manufacturer. “It becomes a supply-chain issue,” he says, “when you have sales reps carrying excess inventory all over the place.”

Medical device manufacturers need to keep track of these components “as they go into the patient,” says Sabogal. The issue isn’t solely about traceability, however. Sabogal says SAP frames this scenario “in terms of business process efficiency. Along the way, you confirm that a component has arrived, and you’ve proven that it is the right component,” he says. This same technology is used to track and authenticate drugs through the supply chain by matching the serialized data with information back at the central repository.

Device makers and distributors need to break free of basic point-to-point tracking for a more individualized approach, Sabogal and others assert. Manufacturers of expensive biopharmaceuticals and makers of other well-known branded drugs are the most likely candidates to use RFID and other tracking solutions. They’re also most likely to be able to justify the return on investment (ROI), according to Kim Loughead, director, healthcare solutions for Axway (Scottsdale, AZ).

Axway, which makes supply-chain monitoring software, has seen its business grow since 2007 because of the need for track-and-trace solutions driven in particular by proposed e-pedigree programs in the United States and elsewhere around the world. Sales have also benefited from bar coding and RFID requirements, Loughead says. This regulatory climate, as well as the anticounterfeiting and antidiversion efforts, has led manufacturers to look closely at the ROI factor, she says.

Axway continues to find success targeting branded drug manufacturers and the biotech sector, where diversion is a major concern, Loughead says. “Those products are much more sensitive, high cost, and high value. They also tend to be manufactured specifically for patients. You want to make sure that the integrity of that product remains intact, so that it makes it through the supply chain.” Loughead says many of the cold-chain technologies in use today handle certain points from the production floor to distribution with a pack containing a sensor “to make sure that point-to-point in the chain is covered.”

Manufacturers, particularly of expensive, temperature-sensitive biopharm products, are “trying to get a better picture of how effective their temperature monitoring is through the supply chain because at the end of the day they’re the ones who have to replace that product if it loses its efficacy. Our technology can enable that end-to-end monitoring that leads to the retail point.”

These new track-and-trace advances, while solving one set of problems, can cause another set to spring up elsewhere, according to Andrew Strauch, vice president of product marketing and management for Mikoh (McLean, VA). “Every time you develop a new technology, you’re creating new vulnerabilities,” says Strauch, whose company manufactures tamper-evident RFID and non-RFID tags and labels.

Strauch says off-the-shelf tags “can be moved from an authentic product to a counterfeit product and be put back in the supply chain.” Designed to detect such chicanery, Mikoh’s tamper-evident tags come in two types. One is a tag that is destroyed, no longer works, and shows visual evidence of tampering. Someone tampering with the RFID version “actually damages the electronics of the circuit,” he says.

Mikoh’s Secure Container system has a built-in mechanism for sealing and resealing the container with a security tag. The system can be used as “item-level RFID tagging for different types of drug requirements” and other needs. “You get all the advantages of RFID with respect to sending containers around the world and being able to track them wirelessly without a line of sight,” Strauch says. An embedded mechanism in the container enables the sealing and resealing capability.

The ability to copy tags “and insert those tags into the supply chain is another security issue that has to be addressed,” Strauch warns. He admits that “a number of different factors come into play in determining the level of tracking and security needed.” Some of the questions relate to pharmaceuticals worth a “few cents a pill to a couple thousand dollars for a vial of material,” he says. “So what works for one might not work for another.” Decisions on the right technology often depend “on different types of materials and assets being tracked.”

Mike Adams, director of marketing for repository and cold-chain logistics services specialist Fisher Bioservices (Rockville, MD), believes downsizing by pharmaceutical manufacturers and growth in the biopharm sector will make pinpoint track-and-trace monitoring increasingly important. Several pharmaceutical manufacturers have laid off employees considered unessential to the manufacturer’s pharmaceutical or biological focus, he says. “They’re also divesting big office buildings with high overhead costs. They’d rather spend the money on R&D and product development” and look to outside firms for nonessential tasks.

“The days of the big blockbuster clinical trials for one big drug such as Lipitor are maybe not coming to an end but are slowing down in favor of personalized medicine approaches,” says Adams. “When you have genomic information about a patient and then develop customized therapies you won’t see these huge trials.”

As a result, “product integrity is crucial,” Adams says, “particularly when you’re talking about customized or personalized therapeutics. They tend to be more on the biologics side. All those things have very specific storage and shipping and delivery requirements. If temperatures vary a few degrees on either side of the prescribed storage temperatures, the efficacy of the drug will be lower or [nonexistent].”

Fisher Bioservices doesn’t use RFID and depends on GPS technology in its cold-chain transportation, Adams says. All the company’s vehicles are equipped with GPS equipment and only the vehicle itself uses the technology, not the individual specimens. “We do a lot of direct-to-patient deliveries. I could see where people would want that level of capability,” he says. “From our level of services, once it’s delivered to the patient in the hospital room or another warehouse, we consider our responsibility finished.”

Henry Ames, director of strategic marketing for cold-chain logistics specialist Sensitech (Beverly, MA), believes that, despite their overall level of concern for product quality and patient safety, most manufacturers of temperature-sensitive drugs “view their job as ending at their shipping dock. This is a significant problem.”

FDA’s expectations as well as federal requirements codified in the Federal Food, Drug, and Cosmetic Act oblige all supply-chain partners “to audit their upstream suppliers” in order to ensure drugs have suffered no “degradation due to thermal variability” or other negative impact, Ames maintains. Chapter V, Section 501, Subchapter A (2)(B) clearly states that methods, facilities, and controls for manufacturing, processing, packing, and holding drugs or medical devices must conform with current GMPs or risk being considered adulterated. Ames singles out the word holding, which covers distribution, transportation, and warehousing for storage or transfer, noting specifically that the act’s language equates holding with storage.

“End-to-end cold-chain compliance is a significant focus for a number of industry-leading organizations,” he says. “The least controlled and least documented” areas of the distribution environment are in its “later stages.” Among them are wholesalers, distributors, repackagers, and similar links in the supply chain. State boards of pharmacy have been lax enforcers, he says, because “they simply don’t have the financial or human capital resources.”

There are additional track-and-trace challenges that affect FDA’s oversight, according to the Healthcare Distribution Management Association (HDMA; Arlington, VA). HDMA, which supports ongoing efforts to explore RFID and other monitoring technologies, believes the “single most important next step is for FDA to complete its work on evaluating and establishing a standard for technology and the identifier, required as part of the FDA Amendments Act.” The association says a single, national standard is essential for implementing an interoperable track-and-trace system nationwide for real-time monitoring.

Along those lines, Paul Fowler, Axway’s chief marketing officer, North America, says “more and more connected tool sets have evolved into more of a social networking Web 2.0 strategy.” At the current stage, “everything is really point to point to point.” In the near future, there will be less point-to-point interaction and “more of a social network strategy where everybody has more open access to where everything is at all times.”

Beans of Blue Vector and others insist that the technology is ready and there’s a sound ROI argument for using real-time RFID, 2-D, and related monitoring methods. Changing entrenched business practices is the next big hurdle. “The hardest part is probably going to be retraining workers,” says Beans.

Fowler, however, argues that supply-chain executives are not entrenched but rather “driven by extremely low margins” to focus laserlike on efficiency and ROI. Not all of the technologies needed for complete “total-item” serialization and track-and-trace location “are ready for prime time,” he says. Executives such as himself, he further points out, “argue that tracking all items adds very little value at a high cost.”

Public safety, supply-chain efficiency, and protection of margins and brands are the “top drivers for serialization,” Fowler asserts. Managers will examine several factors to determine whether further implementation of advanced technology is warranted. This in turn will depend on the needs of the supply chain’s product “subsets” and variables such as cost, volume of sales, patient benefit, and public demand.

Beans knows that developments have shifted from the factory floor to the executive suite. “Five years ago, I would have said the technology is the hardest thing,” he says. “Now we’re back to a classic business process change.” He reasons that each link in the chain should focus only on its core business goals. “If I’m a drug manufacturer, repeatability and quality are my two biggest things. For the distributor, it’s all about distribution efficiencies. For the retailer, it’s all about having product on the shelf when the customer comes in. All those guys have processes they’ve honed over time.”

Just look at Blue Vector’s trajectory, Beans says. “The system is now mature enough to deploy widely. Five years ago, I would have said: ‘I don’t know if this can be done.’ It would have been a big science fair project.” Now it’s magic.

No votes yet